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Stanford Swinton: Coping with the Challenge of Open Banking

Bain Partner Stanford Swinton shares three actions UK banking executives can take to defend against disruption from new regulations.

By Stanford Swinton

July 23, 2018

Video

Stanford Swinton: Coping with the Challenge of Open Banking

As open banking regulations transform the UK market, around 10% to 20% of banking profits could be at risk. Stanford Swinton, a partner with Bain's Financial Services practice, shares three actions banking executives can take to defend against disruption.

STANFORD SWINTON: Banking professionals around the globe are very interested in what's happening in the UK on open banking. The new regulations that have come in are going to require banks to provide access to their customer data to other banks and third parties. So the impact of the accessibility of the data of customers through open banking is that that dramatically lowers the transaction costs for customers of sharing their data with third parties, being able to compare products and services on those platforms, and potentially switch products and providers.

We recently conducted a survey together with Salesforce and MaritzCX of over 4,000 UK consumers, looking at what consumers may do in response to open banking regulations. Over 50% of consumers who responded to the survey said that they would be willing to share their data with banks other than their primary bank, or with third-party institutions. The potential impact of open banking is that 10% to 20% of UK banking profits could be at risk, in particular with the younger, wealthier, higher-profit segments of the industry. As a banking executive, you need to think about three things to be ready for open banking: providing simple and digital customer experiences, being relevant within the ecosystem that customers engage with to meet their needs, and having customer-led lean business models that enable you to innovate at pace. We think banks that take these three steps will be most prepared to thrive in a world of open banking.